It has been a quiet summer. Not much has happened. The stock market has been less volatile and the volume on the NY exchange has been the lowest volume in over 10 years. The market has drifted a bit higher. Most of the key economic indicators have been quiet as the economy has crawled along. Critical decisions have been postponed but the direction of the world economy should be decided in the next few weeks.
After postponing tough decisions in Europe, time is running out. Spain, Greece, and Italy are all having serious economic problems and they need help from the ECB (European Central Bank). There are meetings coming up soon that will decide whether Germany can bail out Spain and whether the ECB has the ability to keep borrowing cost for problem countries in Europe from spiraling out of control. There is also the report on unemployment for the U.S. coming out September 6th. The outcome of these meeting will demonstrate how the world will deal with its persistent slow growth economy and the troubling debt problems.
In this current economic environment, it is best to be invested but also be cautious. The world economy is slowing and we live in a connected world economy. China’s economy has been slowing more than expected, and Europe is moving into recession. The U.S. Economy is growing under 2% and there are threats of a slowdown before the end of this year. With that as a background, we have a defensive equity portfolio paying higher dividends. We have not changed our positions in the last 2 months but we are building the gold position again. Central Banks around the world will continue to print money.
The alternative is the 10 year U.S. Treasury Bond yielding about 1.6% and the inflation rate is still over 2%.
Please contact me directly to discuss your portfolio.
Aloha,
Darren Schneck
DISCLAIMER
The views and opinions expressed herein do not necessarily represent the views and opinions of SCF Investment Advisors, Inc. or any SCF-related entity.
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